A bill aimed at making school funding more equal across Utah earned committee approval Wednesday despite concerns that it could mean higher property taxes in most school districts.
SB81 seeks to address what many have said is an ongoing problem in Utah education: Some school districts aren't able to spend as much money on students as others, despite higher local property tax rates, simply because they're in poorer areas of the state. Utah schools are funded largely through income tax, which is already distributed equally per student across the state, but property taxes also make up part of the school funding pie.
The bill aims to help fix the disparity in property tax funding by essentially collecting more property tax revenue over time at the state level while potentially decreasing the amount collected at the district level.
SB81 would freeze a state property tax rate known as the basic rate that normally decreases as property values rise. That would mean more money collected by the state, and then equally distributed to schools, as property values rose over time. Meanwhile, school districts would be required to lower one of their local property tax rates by the same amount to keep taxpayers from paying more money overall.
School districts would, however, be allowed to hold truth-in-taxation hearings to keep their local property taxes steady if they felt the need.
"Over time, this will, in fact, significantly improve equity of revenue per student," bill sponsor Sen. Aaron Osmond, R-South Jordan, told committee members Wednesday.
Sen. Howard Stephenson, R-Draper, who has been pushing for equalization measures for years, also applauded the approach. He said the current system is unfair because it leads to a district like Park City spending more than $10,000 per student while a district like Nebo spends less than $6,000, despite a much higher local property tax rate than Park City.
"This begins to correct that," Stephenson said. "Slowly, over decades, we will see this huge disparity start to close and we will say we as a legislature care as much about kids in Tintic [district] as we do about kids in Park City."
But Sen. Patricia Jones, D-Holladay, said the bill would inevitably lead to most districts having to raise or hold steady their local property taxes to make up for the otherwise automatic decrease in local taxes in the bill.
"I can't imagine a school district being so flush with money they're not going to need to replace those funds," Jones said.
Tim Leffel, representing business administrators and superintendents across the state, noted that the bill would likely mean truth-in-taxation hearings in 25 of the state's 41 school districts next school year. Leffel, who is finance director in the Davis District, said districts shouldn't have to hold truth-in-taxation hearings just to maintain the amount of local taxes they now already collect.
Unless they held hearings to keep their local property tax rates steady, those 25 districts could lose, overall, from $30 in the Wayne District to $162,000 in Park City.
The Senate Education Committee approved the bill 5-1 on Wednesday and it now heads to the Senate floor.